The secretory vesicle hypothesis of peptide precursor processing, originally proposesd by our laboratory, continued to gain experimental support. This included findings of prohormone converting enzymes, carboxypeptidase B-like enzymes, aminopeptidases, and peptidyl Alpha-amidases in neurosecretory vesicles. The development of the vasopressinergic and oxytocinergic neurons in the rat hypothalamus has been studied with respect to precursor expression and processing. Oxytocin neurons lag behind vasopressin neurons in the expression of processing mechanisms and neurite outgrowth, but not in peptide precursor synthesis. Optical methods have been used to record action potentials in pituitary nerve terminals, and have also revealed a light scattering phenomenon correlated with secretion. Studies of the kidney vasopressin receptor in vivo shows a permanent down-regulation of receptors after exposure of neonatal rats to excessive hormone. A tissue culture model of vasopressin receptor containing epithelial cells showed that the receptor, coupling proteins and adenycyclase are expressed early, but that development of a physiologically active receptor/adenylcyclase complex occurs at a later stage.